Commentary

In Massively Fragmented TV World, Is Content Still King For Media Owners?

by Dave Morgan , Featured Contributor, October 15, 2015

Ask media owners what business they’re in, and they’ll say the content business — that they are storytellers, and that their companies are well positioned for the future because “content is king” and there will always be demand for great content.

My question for today: Even if the demand for premium video programming continues to grow (and I believe it will), is a content-centric strategy the best one for today’s TV media owners?

Clearly, this strategy has played very well for CBS, which has done a masterful job of leveraging its studio and programming for incremental, ongoing revenuer streams. But will this work for all TV companies?

Earlier this week, Discovery’s David Zaslav questioned whether TV companies may have jumped a bit too fast to sell shows to streaming video outlets like Netflix and Amazon. And what about the the current state of movie studios?

Can great video content continue do well for TV companies if it is unbundled from their current promotion and distribution platforms?

Great content can capture big audiences. Of that there is no question. However, many would argue that TV companies have also been able to generate decent audiences -- certainly when compared to pure digital companies -- sometimes with even average content.

The power of TV companies’ built-in distribution and marketing, and the passiveness of TV audiences, can sometimes deliver numbers just by having content on the channel. This phenomenon never happens in pure digital channels.

TV companies need to be wary of what happens in the future if they walk away too quickly from their legacy distribution power.

And most critically, TV companies can’t let being a content-centric company distract them from the extraordinary power they bring to advertisers and the economic clout they deliver. Streaming video on demand today delivers a much, much lighter ad load than linear TV delivered conventionally.

We may all believe ( I do) that the future of TV advertising will be about delivering fewer, more relevant ads. However, we may not want to overly encourage today’s linear TV viewers to prematurely abandon that world for the streaming world, where there’s just so many fewer ads -- and much less ad revenue potential.

Yes, content is king -- but let’s not forget that in TV, distribution is still King Kong. Focusing on great content production is a critical and smart long-term strategy. However, it shouldn’t be pursued mutually exclusive to maximizing the power of the legacy distribution and advertising power of TV. Once that goes away, it can never be rebuilt. Let’s not make that happen before we have to. What do you think?

content, tv

16 comments about "In Massively Fragmented TV World, Is Content Still King For Media Owners?".

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Mike August from Adam Carolla Show, October 15, 2015 at 5:54 p.m.
Content was once King and analog distribution its kingdom, but in a broadband world that commodotizes that distribution, 20th century PUSH media titans now compete with 21st century Media pirates in a new PULL media reality...

The new King of Content is the customer and they have formed a Viewerocracy that requires Content Owners and their marketing partners to win their vote...

How? Customization is the only successful path to future success, its Media Darwinism and the future belongs not to the strongest or the smartest, but to those who are most adaptable to change...
Reply

Doug Schumacher from Zuum, October 15, 2015 at 9:11 p.m.

"Yes, content is king -- but let’s not forget that in TV, distribution is still King Kong."

Nice one, Dave.

Rajaram R from TCS, October 16, 2015 at 4:08 a.m.

It is only people like us who have seen the analogue talking about Distribution. The millenials be it the viewer or the nex gen employees in those studios or TV companies think only technology. So far, the streaming world offers so much of positive outlook for the future but I am sure the dynamics and economies that Linear TV will be seen during the post mortem stage. Neverthless, linear TV has to sustain and the smaller companies of course, will struggle if they dont invest like CBS..

Leonard Zachary from T___n__, October 16, 2015 at 9:34 a.m.

Content is King but at a value proposition to the consumer.

ESPN is King becuase its subsidized by 100M subs, many of which dont watch ESPN. So the content is price inflated.

CBS is doing well but take away their Retranmission rights, a regulatory corporate subsidy they weild like a hammer, and its a new dawn in a Free Market world regardless of distribution.

Distribution and Innovation are keys to the Future. (just not legacy distribution)

Mike Einstein from the Brothers Einstein, October 16, 2015 at 10:04 a.m.

And therein lies the problem, because media owners aren't in the content business, they're in the commercial media (a.k.a. advertising) business, and the only user experience they should be concerned with is the advertiser's.

Dave Morgan from Simulmedia, October 16, 2015 at 11:01 a.m.

Great points all. Thanks. I very much agree with the notion that a critical point of pivot in the future of TV media owners will be the implications of creating first and foremost for consumers rather than for advertisers.

Jack Wakshlag from Media Strategy, Research & Analytics, October 16, 2015 at 12:24 p.m.

Somebody has to pay for the content, and distribution and marketing strength maximizes impressions. Larger platforms will generate more impressions for any piece of content. That applies to Facebook as well as CBS.

Tom Goodwin from Havas Media, October 16, 2015 at 12:35 p.m.

Dave, imagine trying to explain the difference between TV and Video to a 10 year old today as they watch their TV and Phone.It would make no sense.

All the expressions you use in your post are techniques of the current analogue paradigm that have no meaning in the near term future.

Distribution of content is the easy part, via Facebook, Twitter, SnapChat, Periscope, YouTube.

All that matters in the future is the quality and virality of content. How it gets to people and what weird old term we use for it becomes irrelevant.

Quality content makers in the future will make more money than ever because the aggregation layer has more personal data. It's that layer where the fight will be.

Leonard Zachary from T___n__, October 16, 2015 at 1:04 p.m.

Not so fast....bandwidth constraints on Mobile needs to be Addressed with a viable solution which no Digital Tech Co has today....and neither do the TV Broadcasters or the Cable Media Cos....

Mike August from Adam Carolla Show replied, October 16, 2015 at 1:41 p.m.

exactly right and with the democratization of broadband, the old school distributor now finds their primacy as middleman between artists, audience and advertisers totally disrupted...

The new reality going forward is that content distributors will have to change their client emphasis from advertisers to talent who they will need to support with marketing dollars...

This is the new opportunity for talent reps and managers going forward through partnership with their artists directly with marketers to make content of all shape and kinds...

No more Kings or Kingdoms, just a bunch of Feudal Knights all fighting for recognition from a population base that can no longer be ruled...

Dave Morgan from Simulmedia replied, October 16, 2015 at 2:31 p.m.

Great points Tom. I agree that it's going to take some time to see how the terminology of the evolving video ecosystem plays out. I wouldn't be surprised to see the term and concept of TV survive in a signficant form, a big point of Michael Wolf's recent book. It will be fun to watch it play out.
I should have emphasized the promotion power of the current distribution model as opposed to just focusing on distrubtion. And, while it's true that Facebook, Google, Snapchat, etc can deliver enourmous distrubtion, they are still struggling to deliver the massive, fast-cuming ad impact of conventional TV.

Mike Einstein from the Brothers Einstein, October 16, 2015 at 5:27 p.m.

The TV guys understand why it only makes sense to cede total control of both audience and attribution for the right price. And, what do you know, it works!

Ed Papazian from Media Dynamics Inc, October 16, 2015 at 6:24 p.m.

As we all know, "really good" content usually---though not always---requires more money to create. Often a lot more money. This leads many content producers to go with entities that have larger distribution, which, in turn, generates more audience and income---either via ads or subscriptions.

While the manner of distribution is a factor, especially when the technology offers the user freedom of selection, timing and other benefits, ultimately, most users will not watch something that doesn't interest them--let alone pay for it----even if said content is distributed in a manner they favor or find to be more compatible with their mindsets and/or lifestyles. There are probably some exceptions to this general rule, however, very few of the talented, big time content creators who also wish to make as much money as possible, will be willing to risk dealing with smaller, more selective distribution platforms. Or, if they do, they will scale down their costs and, probably, the quality of their low budget creations, so they, too are profitable.

Despite all of this, I would love to see more "independent" producers---even some amateurs---give it a try and win---just to prove me wrong in my general assessment. That would be a real feat but also a really big lesson for "The Media Establishment, which all too often holds rigidly to the credo that "big" equates with quality, while "small" does not. I don't neccessarily buy that.

Sudhakar Kaushik from Head of OTT, SeaChange replied, October 16, 2015 at 9:24 p.m.

Dave, this is a very timely piece. But I think we need to think of two key points. Yes, Media companies with good content are the Kings but gone are the days - here I agree with Mike August's points- where they can rule their customer subjects willy nillly.. .. the content has to be relevant and engaging.. ie., has to be customized which is by definition not easy in a linear broadcast model. And that brings up the second point. Granted the ad load is lighter in streaming, to your point, but isnt "relevant content to the right audience" more valuable .. I strongly think media companies should start using a mix of approaches and do more to stay relevant, especially as MCNs rise and pose such significant threats to premium video

Dave Morgan from Simulmedia, October 17, 2015 at 9:28 a.m.

Thanks Sudhakar. You've made a really good point. The investments will only be able to be made - to Jack Wakschlag's point - if the economics of "fewer, more relevant" ads can pay the bill for the increasingly expensive content. That will require not just data and some degree of targeting but packaging and sales models that can combine TV's unique massive reach to likely buyers and provabkle ROI to get the marketers to pay the premiums they will need to.

Kathy Newberger from TBD, October 19, 2015 at 12:37 p.m.

I was just talking yesterday about the power of distributor promotion - once again, you're reading my mind, Dave!

The same content performs differently (for viewers AND advertisers) on different distribution platforms. Some years ago, the advertising and content team from a major CPG marketer was gobsmacked when a trial program with one tv distributor with a small footprint, led to dramatically more content views than that same content had had, with digital promotion, nationally and over a much longer duration. For another example, look at what happened when Oprah launched a TV network. Without the built in promotion from stations whose own interests were served by promotiong her show, her network took a long time to gain momentum. Distribution, and its marketing muscle, is indeed King Kong.

To get great results advertisers and media companies need to think about distribution - making it easy for consumers who definitely don't think about it - they can't watch what they don't know about and what they don't have. A digital world means that everyone should be able to get everything, but it definitely doesn't mean they will.

And yes, to many media marketers today, distribution feels like it should be easy - but smart media companies are playing a long game here as Jack reminded us. Look at CBS - withholding VOD from many distributors and launching their own subscription model. I'm not sure who said it, but I often think about the line, "Hits make networks." People WILL find and pay for content they think is valuable, but if they're already entertained enough, or don't know that a video (or whatever!) is worth their time - promotion is required. Word of mouth and social media won't be enough on its own.

In my opinion, agencies and digital markers experienced in driving tune-in and comfortable working in a fragmented environment are uniquely positioned to serve all types of advertisers nowadays - reaching the right audiences means more than just buying what's efficient and easy and what platforms are biggest. Yes, facebook and MCNs should be part of the media equation, but anyone who rules out traditional television, multichannel video, place-based video and the like, is missing a big part of the picture.

Thanks for sparking this conversation!